Blame Basel rules for the UK house price bonanza

June 15, 2017

Chris Watling, Financial Times

“Compounding is one of the most powerful forces in the universe” is a popular maxim that springs to mind when thinking of the UK’s housing market.

On standard housing valuation metrics, such as average house price to average income, housing is again at its most expensive on record. Since 1980, the compounded inflation-adjusted gain for a UK homeowner has been 212 per cent. Before 1980 house price gains were much tamer over the various cycles either side of the second world war. Indeed, in aggregate, prices were largely unchanged over the previous 100 years, once inflation is accounted for."